Unum is proposing an overhaul of the Statutory Sick Pay (SSP) system that would abolish the minimum earnings threshold to make all workers eligible and which would more than double the maximum amount people are paid per week when sick.
Under the proposal there would be no requirement to earn above a particular threshold and no limit on the number of weeks it could be claimed. Employers would pay for a statutory minimum and employees could top up to provide extra support.
This would make around two million more workers – 70% of them women – who do not currently qualify for SSP eligible.
The payment would be increased with a standard allowance of up to 10 hours at National Living Wage with 35% on top based on the employee’s salary, with a weekly maximum of £250.
Unum estimated around 60% of the direct financial benefits of the scheme would go to those earning below £25,000 a year. When on sick leave, these individuals would receive an average of £103 a week — a little more than under the current SSP of £99.35 per week.
The proposal applies to those sick for more than three days, who are off work for all or part of a contracted day.
The proposals would also result in the use of social security and tax benefits of increased sick pay to part fund a £500m scheme for supporting businesses to improve back-to-work support.
Employer rebate and incentive for workplace health
The proposal called Statutory Sickness Support features in a report conducted by WPI Economics with the Unum, which the insurer said would move from a system focused purely on payments, to one designed to deliver proactive and effective employee support.
Unum UK recommended that the support package included a conditional employer rebate targeted to employers who were able to demonstrate they were effectively managing sick absences.
And that it should have a financial incentive to encourage business to adopt existing market solutions for workplace health support where there is a strong evidence back to support this.
But the insurer highlighted that piloting and evaluation of the different options was required to ensure maximum benefit to workers, their employer and society. It added this could be facilitated by the return of mandatory reporting of sickness absence by firms.
Current system fails to reflect population
The report claimed that SSP, which was introduced in the early 1980s and has gone largely unreformed since, fails to reflect changes in the way the population now lives and works.
Workers on SSP currently receive £99.35 a week. And around two million workers – 70% of them women – do not qualify for SSP.
Research data estimated the current system directly costs the UK exchequer £850m per year in lost taxation and increased benefit spending. In the wider economy, ill health that prevented employees from working cost the economy £130bn a year before the pandemic.
Unum claims its proposed reforms would boost the average proportion of salary covered by SSP from 28% of earnings under the current system to 63%, with the majority of the benefits going to workers earning less than £25,000 a year.
Alongside overhauling sick pay to better protect workers, its added the reform can help employers with more guidance on how to prevent and manage employee sickness.
Unum said that based on conservative estimates and modelling conducted by WPI Economics, Statutory Sickness Support could potential benefit the economy by up to £3.9bn over the next five years, as well as provide direct savings to the UK exchequer up to £1.3bn.
No protection for low paid workers
Mark Till, CEO of Unum UK, said: “Tackling sickness absence should be a top priority. Statutory Sick Pay is a 40-year-old system that’s really showing its age: it offers no protection at all for the lowest-paid workers and misses the opportunity to promote early intervention and empower employers to deliver the right support for their employees to stay in or get back to work.
“We call on the government to introduce Statutory Sickness Support to level up the health and wellbeing of Britain’s workforce and power the high-skilled growth our economy needs.”
Nick Pahl, CEO at The Society of Occupational Medicine, said: “I welcome support for employers’ investment in health at work – there is a need to level up access to occupational health, as large employers are five times more likely to have access than those in SMEs.”
Angela Matthews, head of policy and research at Business Disability Forum, added: “The importance of the work and research in this study cannot be over-stated. Statutory Sick Pay (SSP) is one of the main urgent issues causing widening workplace health inequalities and it has had far too little political attention to date.
“We have seen many large employers pick up the cost of a poor SSP system to prevent employees experiencing financial disadvantage, but this has become harder since the pandemic. Workers employed by smaller businesses experience greater financial disadvantage and, as this study highlights, poverty.
“This sadly too often makes small businesses a less attractive employment option for workers, who are increasingly mindful of the importance of sickness and pay benefits when choosing an employer.
“We cannot Level Up the country, address increasing intersectional health inequalities, or harness the government’s commitment to increase flexible work options unless we urgently remodel the SSP system. We hope this study will propel them to do so, now.”
Martin McTague, national chairman at the FSB National, said: “The proposals for a new rebate for small employers will help back all those who employ staff with disabilities and other health conditions.
“There is huge potential for positive-sum solutions that work well for small firms and their staff. As Unum has made clear, this brings large benefits to the exchequer as well.
“It is everyday small businesses who deliver most on inclusive employment – a rebate would help support entrepreneurs to do this even more.”